Invoice Discounting

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What is Invoice Discounting?

Invoice discounting is a type of debtor finance that allows a business to access funds against their outstanding invoices without waiting (up 90 days) for customers to pay them. The process is based on the value of your business’s total invoices and accounts receivable ledger.

The finance provider will extend a line of credit to your business for a percentage of your company’s total invoice value (typically up to 90%). As invoices are paid, this credit amount is automatically repaid. It’s a quick and easy way to improve your cash flow without the long-term commitment of a business loan.

Benefits of Invoice Discounting

Invoice discounting and invoice factoring is a comparatively faster way to access cash than applying for a loan or bank overdraft. Discounting provides liquid cash to your business as soon as an invoice is issued. Use it to bridge cash flow gaps, fund the day-to-day or invest in building your business.

Unlock funds tied up in your unpaid or outstanding invoices
Access working capital for the day-to-day or ramp-up business
Funds paid within 24 hours
Your customers repay the balance
No need to put up collateral
A continuous line of credit that grows with your business.

What Businesses use Invoice Discounting?

Construction
Manufacturing
Wholesalers
Transportation
Warehousing
Accounting firms
Clothing businesses
Recruitment companies
Engineering companies
Furniture businesses
Printing companies
Stationery companies
Storage companies
Security businesses
Medical companies
Entertainment companies
Rental Service companies
Cleaning companies

How does Invoice Discounting work?

Invoice discounting works by having a finance provider review your company’s accounts receivable ledger, which represents the money owed by your customers. After assessing the ledger’s health, (which occurs during the application process), the provider will advance you a portion of its value, typically up to 90%.

To facilitate the process, the provider will set up and manage an account in your business name (disclosed facility) or utilise your existing bank account (confidential facility). When invoices are due, customers will make payments to this account, repaying the provider. The provider (funder) will then pay you the remaining balance, deducting their fee.

This finance facility is designed to grow with your business. As the number and value of invoices increase, more funds become available without needing further credit checks and applications.

Step-by-step process of Invoice Discounting

1. Invoice customer

You provide products and services to customers and send them an invoice, typically including the due date, amount, and payment terms.

2. Send invoice details

You send the invoices to your lender or financial provider to review accounts receivable (money owed to your business) and approve invoice discounting.

3. Access funds in advance

The Funder advances you a percentage of the invoice’s value. The rate and time to receive funds (usually 24 hours) vary depending on the business, amount due, and finance provider.

4. Invoice collection

Depending on the arrangement, your provider may collect payments on your behalf. Or you may be responsible for collecting them.

5. Receive the balance minus fee

When the customer pays the outstanding invoice, your lender pays you the remaining invoice balance minus their fee. Lenders will also charge interest.

How to apply for Invoice Discounting

Establish your business requirements

Contact principal broker Brin Hayden to discuss your business circumstances and begin the process. We’ll source a suitable finance provider for your needs and ensure all your crucial information is in order to secure the funding you need.

Organise and lodge documentation online

Providers will require solid invoices and an accurate, up-to-date view of the accounts receivable ledger to prove the creditworthiness of your business. These will include a review of revenues, profits, cash flow, existing debt levels, and how long you’ve been established.

In addition to the usual secured business loan supporting documents, we will need to provide the following:

A valid ACN
Accounts receivable ledger from your management accounting software
Your trading accounts for the last 12 months
Demonstration of a minimum turnover of $500,000 per annum
History of invoicing customers with credit terms of up to 90 days
A positive credit rating.

Gain approval and secure funding

With our guidance, we can source a provider and assemble your application in as little as 5 business days. Funds can be available within 24 hours of application approval.

Why Choose Cabbage Capital as Your Finance Broker?

Our founder and principal broker, Brin Hayden, brings over 20 years of experience in the commercial sector, focusing on solutions for small to medium enterprises to provide a real impact.

“Because we’re smaller, leaner, and not tied to a single bank or finance provider, we can better deliver service and product choices to work in your best interests. We’ll shop around to identify and source the ideal package and arrangement for your requirements. I bring in-depth knowledge of the lenders, options, and facilities open to you. And expertise to negotiate the best rates and terms on your behalf.

Invoice Discounting gives you fast, flexible finance to cover the day-to-day and build your business. We listen first and identify the best provider, then prepare your application to secure what you need. Then we’ll help you integrate your new facility with your accounting system. We’re here to help you.”

Brin Hayden

Founder and principal broker

“Because we’re smaller, leaner, and not tied to a single bank or finance provider, we can better deliver service and product choices to work in your best interests.”

Let’s get started

Brin Hayden business loan broker and founder of Cabbage Capital

If you’d like to book a meeting to discuss your needs or start a finance application, leave your details, and we’ll get back to you within 24 hours. Need help with operating lease loan application? Call Brin at 0418 574 655.

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